By Keith Waters
Keith Waters is head of trade development at Fraser International and has more than 30 years of extensive knowledge and experience in international trade. Here he discusses the opportunities and benefits for Welsh export markets within Eastern Europe.
The Holy Grail for exporters is to find new markets, with low risk, that are easy to deal with and have money to spend.
Surprisingly enough, there are number of these not too far away, but they don’t often crop up on the radar of Welsh companies. I’m referring specifically to the Eastern European countries who became EU members in 2004 – Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Republic, and Slovenia. With the exception of Czech Republic, Hungary and Poland, the others are now part of the Euro Zone.
Some of these countries are still struggling with the dichotomy between state control and a free market. To help them with the process of reducing state control and dismantling state enterprises in order to help move them to a competitive marketplace, the countries have access to considerable European funding.
This presents many opportunities for Welsh companies. The principles of the EU and the Organisation for Economic Co-operation and Development (OECD), do not allow member states to discriminate between national and foreign investors. Unfortunately Britain very rarely features as an investor, with the main investors being Austria, Switzerland, Netherlands, Germany, Scandinavia, Italy, Belgium and Luxembourg.
Some countries are still overly bureaucratic, and the transition from historical state ‘control’ to a free economy still creates problems. Poland is one such market which still suffers from overly bureaucratic administrative procedures. However, Poland is moving in the right direction and was ranked 14th among the countries deemed most attractive by transnational companies for the period 2013-2015 (United Nations Conference on Trade and Development 2013 World Investment Report). Its main assets are its strategic position, a large population, its membership in the European Union, economic stability and a fiscal system attractive to businesses. Its multilingual and skilled work force, rising productivity and cheap labour costs all tend to make Poland an internationally attractive country to do business with.
The smaller countries like Slovenia, Slovakia, Lithuania, Estonia and Latvia are all taking full advantage of the opportunities that EU funding offers. These countries all have populations below three million (not dissimilar to Wales) and are actively looking to do more business with UK companies.
Slovakia, for example, has mastered the difficult transition from a centrally planned economy to a modern market economy and, as a result, many of the industrial and other sectors have now been privatised. The industrial sector in the country is huge and includes textiles, metal processing, ceramics, metal products, paper, food processing and packaging, machinery, beverage brewing, transport vehicles, chemicals, nuclear fuel, optical apparatus and rubber products. There are many opportunities here for Welsh businesses.
Similarly, Slovenia has economic and political stability and is looking to work with its European partners to improve its infrastructure. Projects in the energy sector, rail infrastructure, sewage treatment and waste, co-financed by European funds, all provide opportunities for Welsh companies.
The biggest buying/spending power and GDP/capita lies within Slovenia, which has a well-established and growing pharmaceutical sector, and which, along with Slovakia, also has a large automotive industry with both countries having modern assembly lines, dependent on Tier 1-3 supplier chains. These industries are all keen to develop links with UK.
At Fraser International we work closely with the British-Slovenia Chamber of Commerce (BSCC) in Ljubljana and hosted a visit from them in the middle of February, which also included a meeting with the Welsh Government. We will be hosting a trade mission from Slovenia to Wales in early June of this year, which will provide Welsh companies an opportunity to meet with possible partners. It is also hoped that an outward mission of Welsh SME’s will visit Ljubljana in October or November 2015.
On the whole, these countries are now stable, their economies are all growing, and they present some great opportunities at a low risk.
Fraser International is a leading development company that works with international businesses as well as government and trade investment organisations to help them identify and develop key relationships and enter new markets. Visit Fraser International’s website for further information.